While mortgage rates are still kept below 1.5% on average for 2018, banks are banking on consumer credit to optimize their activities according to Cream bank. Figures from the French Association of Financial Companies indicate an increase in demand.
Personal loans on the rise
Whether personal loans or credits allocated to the purchase of property, the number of files has increased beyond all expectations over the past twelve months (+ 5%). Personal loan rates are very low, around 3.6% on average whereas they were prancing at 6% five years ago, which are enough to attract individuals in need of cash to carry out their projects. By the way, if you have a personal project to finance, do not hesitate to perform your personal loan simulation in a few clicks with the Borrowing tool.
If the banks have little room for maneuver with mortgage loans, the consumer credit market is however much more lucrative. Mutual banks, such as Lite Lender or Capital Lender, are betting on the product to increase their margins. Thus, more than 42 billion USD were loaned in a single rolling year according to the ASF.
Rates close to 1%
Over a short period, 12 months maximum repayment, the rate for a consumer loan ranging from 10,000 to 30,000 USD remains below inflation which was 2.1% last June. Admittedly, these are promotional offers, but they reveal the new rate war being waged by the banks. Better still, thanks to dematerialization, loan rates have been able to drop in certain organizations below 1% for a repayment duration of 36 or sometimes 48 months. What cheers consumers, who can make the purchase of a vehicle or the completion of work without affecting their savings.
Growth driven by the automotive sector
The good health of the automotive sector is an important lever on the underwriting volume in terms of assigned car credit (+ 4.9%) and LOA (rental with option to buy; + 17.9%) compared to 2017. We are close to the records of 2008, before the financial crisis. The LOA alone represents 20% of the consumer credit granted. Leasing is both a very strong marketing and loyalty tool.
If the purchase of a car tops the list of consumer credit, travel or paying taxes motivate 19% of borrowers. The works credit comes last with the purchase of goods. In addition, 50% of couples borrow money to get married.
The decline in revolving credit
Revolving credit now represents only 20% of consumer credit. Its high rate combined with the vote of the Lagarde law contributed to its decline (- 1.8% last June).
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